Pittsburgh’s pension offset: are its days numbered?
Last week Pittsburgh’s pension board met and received an update on the investment performance and funding status of the city’s pensions. The city’s invested portfolio grew 7 percent, its parking asset fell 1.7 percent from September 2018 to September 2019. Police, fire and municipal plans had, in aggregate, $787.3 million in assets, $1.299 billion in liabilities and a funding ratio of 60.5 percent as of Sept. 30. That places the city’s pension health squarely in the “moderately distressed” range under Act 44.
This week City Council took up a proposed ordinance that would exempt 11 employees—those that are elected, non-union and active as of Jan.1, 2020—from the provision that is referred to as the “Social Security offset”. This affects employees hired on or after June 30, 2004, who are part of the municipal pension plan only. When the employee reaches age 65 and is eligible to collect Social Security, the pension payout (which itself is calculated by multiplying years of service by 50 percent of average salary) is reduced by half.
Based on multiple news articles there is one member of City Council that will immediately benefit from the change should it be approved, but another member wants the proposal to lead to a larger discussion of the offset. As of this writing the proposed ordinance does not have the required fiscal impact note accompanying it.
So what is to be done? In 2015 the city passed an ordinance that waived the offset for several labor unions depending on the employees’ date of hire. If the city did it then, why not again?
Since that time the city passed a 2017 ordinance that frowns upon pension enhancements (at least outside of collective bargaining/arbitration) and the city’s Act 47 rescission report urged the city to “increase its contributions, limit future growth in its liabilities and improve the funding level” after oversight ended. This proposal would run afoul of those principles and add more stress to the city’s “moderately distressed” pensions.